Mercedes Benz Company
COMPANY DESCRIPTION
Brief History
The Mercedes Benz company is globally recognized as the best brand that targets business professional people. For the past years, the company has had a superb reputation for its quality goods and services. According to Legate (21), Mercedes Benz Company is a famous brand of automobile manufacturers across the globe that manufactures automobiles, truck, coaches, and buses. Globally, the company has had a remarkable growth in terms of sales and revenues in the vehicle business. The company attracts most consumers due to its image of quality and exceptional products and services it offers. This has created a platform for the company to attract clients internationally while converting the first time clients to frequent and potential clients.
The company was established in 1871 by Karl Benz (Adler 33). Born in 1844 and died in 1929, Adler continues to argue that Karl Benz was a German car engineer and engine designer who together with Gottlieb Daimler innovated Mercedes- Benz. The first car was constructed in 1893, and in 1894, which was the first to participate in the car race. In 1901, Daimler Gesellschaft Motoren marketed the Marcedes Benz . This was a significant step since it created a platform for consumers to understand the product’s uniqueness. Throughout 1930s, the company produced over 770 models of Mercedes Benz, which were known to be the best and quality cars during that period. The brand attracted most prominent people such as Adolf Hilter who owned multiple Mercedes Benz cars during his time in power. Since its innovation, Mercedes Benz position itself as the best premium car across the globe. Currently, Mercedes Benz has different models that attracts a wide range of consumers.
Industry, segment, and type of product and services
The Mercedes Benz company is the most innovative automotive brand in the world, which has been in existence for over a 100 years. The company has a luxury automobile segment that includes SUV’s and Sedans. The company targets business professional people who earn a high income. In terms of market positioning, Mercedes Benz is a premium car that attracts most consumers specifically those with high income. The company distributes various models such as Mercedes Benz C class, Mercedes Benz E class, Mercedes Benz GL class, Mercedes Benz M class, Mercedes Benz S class, Mercedes Benz SL class, and Mercedes Benz SLK class (Bolsinger 56). The company also offers special vehicles such as ambulance or police modification. Additionally, in the segment of the heavy and medium product category of Mercedes Benz vans it comprises the Vario series, Viano, Vito, and the Sprinter.
With the wide range of products, the company has had a competitive advantage over other competitors as there are varied options that consumers can choose from. With this in mind, the company has had a great opportunity of converting first time clients to potential and frequent clients. This is because as clients have become content with quality services offered by the company, this has enhanced a remarkable growth in sales and revenues of the company.
Location
Mercedes Benz Company is a multinational company located in German. Its brand is used for trucks, coaches, automobiles, and buses. The company is headquartered in various locations such as Baden Wurttemberg and Stuttgart. Besides being located in German, Mercedes Benz cars are assembled and manufactured in various locations such as United Kingdom, United States, Turkey, Thailand, South Korea, South Africa, Spain, Nigeria, and Mexico. Other manufacturing and assembling locations include Mexico, Malaysia, Ira, Indonesia, India, Hungary, Finland, China, Canada, Brazil, and Argentina among others. These locations benefit the company to distribute its products and services globally, which in turn, increases sales and revenues. To target a wide range of consumers across the globe, the company ensures that consumers can access the products from different localities in the world. With this in mind, the company has maintained its number 1 reputation in the world for its quality products distributed in different localities in the world.
Company Mission
The first company’s mission is to give the best products and services to clients. Secondly, maintain a culture of excellence that distinguish the company from other competitors. Thirdly, reduce carbon emissions and waster products by using favoring products to the environment. Fourthly, the company aims to continually improve the quality of its products and services. Fifthly, continually increase the effectiveness of the business processes to maintain the number 1 position in the global world in profitability, image, and quality in the automotive sector.
MICROENVIRONMENT (PEST) ANALYIS
The company operates under the following external factors of the macro environment.
Political Factors
These factors include legal issues and government regulations under, which the company operates. The EU has brought a new legislation that obliges the average content of carbon dioxide emission for the new European cars to be reduced to130g/km come 2012 (Long 77). With this, the company will spend a lot of resources to compile to the new legislation. As Wiehager (20) puts it, there are laws and regulation put in place, which the Mercedes Benz Company must follow. For instance, being environmentally friendly is a social value in the global world today. Thus far, the company may have to make changes that are costly to adhere to laws and regulations.
Economic factors
Because of the modern economic crisis in the world, Mercedes Company together with other car manufacturers finds it difficult to sell and distribute cars effectively. The current economic crisis could hinder most consumers to purchase Mercedes Benz cars due to its high pricing in fuel and maintenance. This may hinder the company to attain its intended goals both in sales and revenues. Secondly, the exchange rate of the Euro could make the Mercedes Benz more expensive in the United Kingdom, and as a result hinders many people from purchasing the product. This affects the buying power of potential clients. Thirdly, with many competitors in the market such as BMW, it affects the financial growth rate of the company compared to other car companies. The company may end up sharing the market thus reduce its sales and revenues. Because of the today’s state of the economy, many people lack the money to buy luxury cars from various companies such as Mercedes Benz, Saab, BMW, and Porshe.
Social factors
According to Russek (29), social factors include the cultural and demographic aspect of the external macro environment. Under the demographic aspect, the Mercedes products and services are targeted at the middle age consumers. The Mercedes products are not much popular with the youngsters since the brand is very expensive and it is difficult to obtain insurance at a young age. This affects the purchasing power of young people as most think these cars are made for the rich and mature people. Under cultural aspect, many people recognize Mercedes as an expensive corporate, upmarket, quality, and mature brand. Therefore, this enhances a positive impact in that mature people and the rich can buy this product. Lastly, the Mercedes Benz company designs quality cars that fit both the female and male specification. With this in mind, both males and females can identify themselves with the Mercedes products. As a result, this influences the purchasing power of both the potential males and female clients.
Technological factors
Innovations in technologies such as crumple zones, air bags, and collapsible steering columns creates a platform for the Mercedes Benz Company to manufacture and distribute safer cars. With the innovation of technology, Mercedes Benz Company established the need to innovate bionic cars that significantly reduces the cost associated with fuel consumption. This has created a strong ground for the company to attract a wide range of consumers from across the globe because of the idea of a safe, environmentally, and comfortable compatible car. With this in mind, the emerging technology might enhance positive impacts on the car industry as many companies will utilize technological tools to enhance comfort and protect environment pollution.
In essence, technological force influences the automobile industry since there is a race between competitors as to who will innovate the latest car model with greatest technology. As mentioned earlier, the technologies currently utilized by the company are Pre-Safe, Distronic Plus, Rear View Monitor, and Command among others. Using technology to enhance comfort, safety, and protect the environment has positively affected the company to attract many clients globally.
INDUSTRY FIVE FORCES ANALYSIS
In this section, this paper will conduct an external analysis of the Mercedes Benz Company. As part of the analysis, the company will be analyzed by using Porter’s Five Forces Model to the industry that in turn will highlight the nature of the competition in the industry. At this point, the paper will analyse the opportunities and competition in the industry to establish the external environment of the Mercedes Benz Company.
According to Gill (44), Porter identified the five competitive forces that shape the market and industry as Bargaining power of suppliers, bargaining power of customers, threat of new entrants, threat of substitute, and stiff competition between the existing markets. The Porter Five Forces for the Mercedes-Benz Company includes the following.
Rivalry
There is stiff competition in the auto manufacturer vehicle industry. In this industry, Mercedes Benz company main competitors are Saab Automobile USA, Porsche Cars of North America, and BMW North America. For the past years, these companies have established a strong brand loyalty with their consumers by offering excellent services. These companies also manufacturers luxury cars that attract a wide range of clients across the globe. To attain a competitive advantage over its rivals, the Mercedes Benz Company has made the following move. First, the company has improved its product differentiation to attract a large number of consumers. Secondly, the company has lowered its products’ prices to target the middle-income class.
Initially, the company was known to sell expensive luxury cars meant for the low and middle class consumers. However, the company has also introduced low priced cars in the market that attracts the middle class and lower class consumers. Additionally, the company offers special discounts and gifts that attracts many consumers to purchase the products. There have been many car companies in the market, which in turn results in pressures on margin and prices. For a competitive advantage, the Mercedes Benz Company has established the need to reduce its prices to attract a wide range of clients globally.
Threats of Substitutes
For the past decades, there have been luxury cars in the market, which are very attractive and operates at an affordable cost (Gill 59). With available substitutes in the market, the demand has become elastic since clients have alternatives to choose from. This directly affects the Mercedes Benz Company whose products may not attract a wide range of clients because of high pricing. With this in mind, it is evident that as many luxury cars emerge in the market, clients have a chance to evaluate whether to purchase from Mercedes Benz Company or other companies that may offer affordable products.
According to Pitt (22), the Mercedes Benz company has various substitutes that creates tension in the market. These include alternative transport such as planes, motorbikes, trains, and buses. Still, alternative prestiges that consumers could purchase instead of considering a ‘fancy’ car. Mercedes Benz cars are considered luxury products and with this, some consumers would choose to purchase other luxury products such as designer clothing, luxury homes, or expensive furniture. With the mentioned substitutes in mind, there may be less in terms of sales and revenues as there are many alternatives that consumers can choose from.
Buyer Power
A research done by Lowe (22) indicates that, the buying power of consumers is the impact that customers have on an industry. This research reveals that, when there is a strong buyer power the manufacturing industry has less buyers and many suppliers. It is worth to note that, clients have a wide option of cars to choose from the market. Most of these cars are high efficiency and affordable. With this in mind, consumers have a chance to bargain for the quality and choose from different companies. In essence, buyers are outlined as the most powerful when they are in a position to purchase goods in large quantities. For the Mercedes Benz Company, the bargaining power for buyers is low since buyers do not have strong flexibility to bargain for low pricing.
Typically, the company operates with two different consumers where each has his own bargaining power. First, commercial consumers who represent the largest scale purchasers such as big companies that purchase fleets. In this case, their bargaining power could be increased since they could enhance growth in the company particularly if they are potential consumers. Secondly, individuals who are personal buyers. In this case, the bargaining power is lesser than that of the commercial.
Supplier Power
Typically, a manufacturing industry requires the following components. These include suppliers, raw materials, and labor components. These requirements are what strengthens or support buyer-supplier relationship between the firm and the industry. In this case, the suppliers of the Mercedes Benz Company supply different parts of cars such as mounts, engine parts, transmission, and steering parts. With this, it is obvious that few companies have access to the supply of various car parts that suppliers sell to Mercedes Benz Company.
For Mercedes Benz Company, there is high bargaining power of suppliers since the products distributed by suppliers have few substitutes. With this in mind, the companies within the automotive industry cannot penetrate to the supplier industry and innovate their inputs.
Threats on new markets and entry barriers
As argued by Larimer (22), the possibility of the new entrants in the market affects the industry in the sense that it protects the firms to achieve higher profit, sales, and revenues. In this case, the new entrants in the automotive industry could further change the determinants of the market such as prices, market shares, and customer loyalty. The Mercedes Benz Company would be forced to change its pricing to fit into the marketplace with new entrants that may be pleasant to clients.
The segment of the Mercedes Benz is at a low threat of the new entrants. This is because for the past decades, the company has had a reputation of providing quality and pleasant products and services in the market. With this in mind, consumers in the market have already developed preference and tastes for this brand. This clearly reveals the growth in the lifestyle stage of the industry where many consumers have had a craving and desire to purchase the company’s products.
SWOT ANALYSIS
Conducting a SWOT analysis is important in that it underline the company’s position in the market. This section will analyze the Mercedes Benz’s strengths, weaknesses, opportunities, and threats.
Strengths
Mercedes Benz Company has a strong brand and lead globally in premium cars. As the leading automotive company, the company is in a better position to inspire and lead other manufacturers across the globe. The Company has a superb reputation of providing high quality vehicles earning prestige and respect in comfort and best design. Mercedes Benz is also known for its comfort, making it the most comfortable and pleasant car ride. For the past years, Mercedes Benz Company has had good associations with governments and prominent people. This has created a strong platform for the company to advertise its brand across the globe without any hindrance or obstacle. Mercedes Benz is assembled and manufactured over twenty countries globally. With this, consumers can easily access the product without any geographical barriers.
Weaknesses
The quality and pleasant design of the Mercedes Benz means that the vehicle is very or fairly expensive. Although the company has a strong brand internationally, high prices hinder many consumers to purchase the product. As mentioned earlier, the brand is very expensive thus not popular with the young people. Still, the brand is not popular with the youngster in that it is difficult to get insurance at a young age. As a result, most young people are denied the privileges to purchase the commodity. Low income consumers cannot afford the Mercedes Benz Car, which requires high cost in maintenance and spares.
Opportunities and Growth
Mercedes Benz has the following opportunities. First, innovating the new clean energy vehicles will be a major opportunity in the market place as many will identify themselves with the company because of caring for the environment. Secondly, as the company utilizes the emerging technologies, it is obvious that this will be a major opportunity for the company to prosper in the modern world where technology is a prime aspect on a daily basis. Thirdly, introducing Mercedes Benz car market in China creates new markets to sell and distribute the products. Fourthly, the development of the new models creates a great opportunity for the company to attract a wide range of consumers globally.
Threats
There are various threats affecting the company to flourish and succeed as ought to be. First, the economic predicament in the modern times discourages and hinders most consumers to purchase Mercedes Benz. As mentioned earlier, Mercedes Benz requires high cost in fuel and maintenance. These discourages most consumers to purchase the product as many believe that the product is meant for the rich. Secondly, the company faces stiff competition from worldwide automobile brands such as Volvo, BMW, Porsche, Volkwagen, Audi, Aston Martin, Ferrari, and Jaguar among others. Secondly, the company faces threats the of the ever increasing government policies in the automobile sector across the globe.
To understand the SWOT analysis in a desirable and understandable way, researchers came with the term SWOT matrix (Long 88). The following is a SWOT Matrix representing the mentioned facts and information about the company.
SWOT MATRIX
Strengths
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Weaknesses
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Opportunities
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Threats
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STRATEGY ASSESSMENT
It is pertinent to note that, a strategic scope reveals the composition and size of the target market (Luikens 44). In the case of Mercedes Benz Company, Luikens affirms that the market of the new cars in the United Kingdom is worth £33bn and used cars £35.2bn. The company has a low market in the United Kingdom. However, the company has a strategy of compensating the low market value by the profits generated through high priced products. To achieve its intended target growth, the overall market includes different specifications of cars, which the company is fully represented. This implies that, the market share varies from range to range across the world. This strategy is consistent with the company’s mission in that the company seeks to attract consumers from different countries across the globe.
According to Long (66), it is vital to access the strategic strength as it defines and evaluates the major competency of the firm. To make huge profits, Mercedes Benz has targeted business professional people with high income. The company targets this group because these people have a strong need of luxurious products, which connect them with their lofty status. The company’s strategy to emerge the best from the stiff competitors is providing luxurious vehicles with the latest performance. This strategy aims at attracting a wide number of business professional people with the need of luxury products and services.
By taking into account how other competitors are operating in the market, Mercedes Benz Company has been in a better position to deal with the current changes within the external environment. The company strong brand assures them that business professional people will always aspire to own their product to gain the prestige linked to the company’s brand. With this in mind, the company diligently works to maintain its strong brand by providing quality products and services to its clients. This is vital since it assists the company to lead among its competitors even in times of economic upheaval.
To increase its sales and earnings, the Mercedes Benz company considers a change. The company intends to change the price of the product to suit in today’s economic trends. For the past years, Mercedes Benz has been associated with the rich because of its high maintenance and fuel cost. With this in mind, the company intends to have a product that is relatively cheap in terms of maintenance and fuel. In this case, having a small engine will be vital in terms of reducing the fuel cost. With this, the product will attract clients with a high income and middle-low income. To enhance customers’ satisfaction, the company offers customer services at most of its locations. As a result, the company solves customers’ complaints and implement the suggestions and thoughts aired by consumers on how to improve the company.
Mercedes Benz Company is a potent illustration of a company that is flourishing in the modern times. Mercedes Benz is a brand known for its comfort, quality, and high class consumers. For the past years, the company has flourished in its sales and revenues as most consumers identify themselves with the product. The Mercedes Benz has been the most successful brand in the 21st century, ranked the second renowned brand in the world after Coca Cola. Its innovative impact, quality standards, technical perfection attract business professional people.
Conclusion
Thus far, it is evident that in the past decades the Mercedes Benz company has improved on its sales and revenues. Since its establishment, the company has attracted a high number of consumers from different localities in the world. As the company continues to utilize the emerging technologies in production, it is obvious that it will stay ahead of its competitors. To fully analyze the progress of the company, this research found it important to conduct a SWOT analysis. In brief, this research has brought into attention that the company has a strong brand, leads in car manufacturing globally, has good relationships with the governments, and offer quality products. However, the company has had shortcomings in various aspects such as high pricing that only attracts consumers with high income and the brand not being popular with the youngsters because of higher pricing and insurance coverage. Additionally, the company faces the threat of stiff competition. For competitive advantage, the company could introduce affordable products to attract consumers with high income and middle-low income. The company’s mission is to attract a wide number of consumers across the globe with quality products and services. Still, the company aims at converting the first time buyers to frequent and potential buyers (Long 19). To achieve this, Long argues that the company has had a strategic assessment of diligently working hard to retain the strongest brand in the market by providing quality products and services to consumers. For the past decades, the company has created a strong path for its target buyers who are business professional people to crave for the products. To attract the target buyers, the company provides luxury vehicles with the latest performance. From this research, it is evident that Mercedes Benz Company is worth recognition in the world for its quality products and services.
Works Cited
Adler, Dennis. Daimler & Benz, the Complete History: The Birth and Evolution of the Mercedes-Benz. New York: Collins, 2006. Print.
Bolsinger, Markus. Design by Mercedes Benz. Bielefeld: Delius Klasing, 2013. Print.
Gill, Pete. Mercedes Benz C-Class Petrol & Diesel Service & Repair Manual: 2000 to 2007. Sparkford: Haynes, 2009. Print.
Larimer, Fred. Mercedes-Benz: Buyer’s Guide : Roadsters, Coupes, and Convertibles. St. Paul, MN: Motorbooks International, 2004. Print.
Legate, Trevor. The Ultimate History of Mercedes-Benz. Bath, U.K: Parragon, 2005. Print.
Long, Brian. Mercedes-Benz Sl & Slc 107 Series: 1971 to 1989. Dorchester: Veloce, 2010. Print.
Lowe, David. Lowe’s Transport Manager’s & Operator’s Handbook 2011. London: Kogan Page, 2010. Print.
Likens, Jim, and Mary M. Hedberg. Standard Catalog of Mercedes-Benz. Iola, Wis: Krause Publications, 2008. Print.
Pitt, Colin. Mercedes Benz W124 E-Class and the E36 Cars: 1985 to 1997. Hockley: CP Press, 2007. Print.
Russek, Peter. Mercedes Benz E Class Petrol W210 2000-01, W211 2000-06. England: Brooklands Books, 2008. Print.
Wiehager, Renate. Art & Stars & Cars: On the Occasion of the Automobile’s 125th Anniversary : Mercedes Benz Museum Stuttgart, May 10 – September 25, 2011. Ostfildern, Germany: Hatje Cantz, 2011. Print.
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